The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) on Friday played down last month’s drop in major sub-indices of the institute’s business sentiment gauge, saying that the outcome was to be expected as growth momentum cools from a standout third quarter.
Business sentiment for the manufacturing and service composite sub-indices fell for the second month in a row, while the construction sub-index was unable to sustain gains made in September, according to the institute’s latest monthly survey.
The manufacturing sector dropped 0.97 points to 100.69, while the services industry fell 2.23 points to 91.05, the survey showed.
The construction sub-index also fell 2.41 points to 93.4, stopping a rebound of 0.17 points seen in September.
The weakened sentiment in the manufacturing sector was a reflection that the nation’s technology sector is growing cautious as the peak season for consumer electronics shipments ends, while other suppliers have begun cutting imports of semiconductor equipment, the institute said.
While long holidays in the past month boosted retail consumption, insurers and securities brokerages saw revenue contract due to lower turnover on the local bourse, impacting the services sector, it said.
As for the construction sector, sentiment was dimmed by an accumulated backlog of housing projects built between 2015 and this year, while potential buyers put purchase plans on hold due to expectations that prices would fall, the report said.
Developers are expected to continue launching new projects next year despite rising land costs, the report said.
Last month’s business sentiment does not mean that Taiwan’s economic growth momentum is weakening, because strong gains during the third quarter had set a high base, Economic Forecast Center director Gordon Sun (孫明德) said.
Exports are not likely to sustain double-digit growth as seen in the third quarter, while prospects are also dimmed by the markets’ tepid reception for Apple Inc’s new iPhone devices, Sun said.
Still, following the government’s wage hike for public-sector workers, the private sector is expected to follow suit, which might add consumption-driven momentum to overall GDP growth next year, he said.
Due to improving global outlook and strong foreign trade, the Directorate-General of Budget, Accounting and Statistics on Friday adjusted its GDP growth forecast for this year to 2.58 percent, up from its August estimate of 2.11 percent, and raised its forecast for next year to 2.29 percent, an increase of 0.02 percentage points.